Smudging the line between restaurants, retailers

Once upon a time, restaurateurs and their investors questioned the wisdom of dabbling in retail. If consumers can eat your specialties at home, they reasoned, why bother visiting the restaurant?

But today, with supermarkets sporting all sorts of products emblazoned with restaurant logos, investors are asking a decidedly different question: Why aren’t you jumping on that (Bob Evans-brand) gravy train?

David Overton, CEO of The Cheesecake Factory, was grilled on that point by a financial analyst last week. “Well, we haven't decided to sell any of our actual dinner items or restaurant items yet,” danced Overton. “It's something that we could look at. We have been asked to do so…[but] the 70-something million people that came in the restaurant last year is where we're concentrating. I still think that's our greatest game at this point.”

Cheesecake, which just recently made concessions to such profound trends as discounting and offering mini-portions, may find the ranks of retail holdouts to be a lonely place. Panera Bread Co. ran through enough menu initiatives during an investment conference call on Thursday to suggest steroids testing for its R&D staff. One of the bigger ones, literally, mentioned by CEO Ron Shaich was a possible move into the retail sale of bulk baked goods.

He explained that units of the bakery-café chain have started retailing multipacks of muffins, scones and bagels. “You will see us focus on selling more seasonal breads at retail,” added Shaich. “We will regularly celebrate our gift worthy breads, things like Panettone, holiday bread, Irish soda bread, hot cross buns and a variety of sweet breakfast breads. We will also merchandise our breads to our guests for everyday use.”

Panera will be selling the baked goods through its own retail outlets rather than supermarkets, a twist that’s also being embraced by Starbucks. Its new retail push, the sale of Via instant coffees for home mixing, will be undertaken through the coffee giant’s own cafes, not a Piggly Wiggly or a King Kullen.

Other restaurants chains recently conferring with investors about retail initiatives include Bob Evans and California Pizza Kitchens, neither of which is a stranger to that alternative sales channel.

Indeed, Bob Evans is as much of a grocery-product supplier as it is a restaurant operator, a role it continues to expand by adding heat-and-eat products bearing the brand of its namesake restaurant chain. In its most recent quarter, for instance, the company added nine new retail choices, including “family-sized” portions of such comfort foods as mac and cheese and mashed potatoes.

But it also raised what should be a yellow light for restaurateurs branching into retail: During the most recent quarter, supermarket sales of Bob Evans-brand products decreased on a volume basis for the first time in more than seven years, executives noted.